Should we cover Wales with wind farms?

Kristian Niemietz

25 May 2011

It is not exactly a secret that obtaining planning permission for building new homes is notoriously difficult in Britain. An unholy mix of vested interests, pastoral romanticism, and myths about overpopulation and overbuilding choke off the housing market’s responsiveness to people’s needs.

But there seems to be an exception to the anti-development bias engrained in the planning system. For political pet projects like wind farms, the red carpet is being rolled out, even if this means riding roughshod over the preferences of local populations. This week, protesters in mid and west Wales are voicing their anger about a grand investment scheme, which would cover parts of the countryside with wind turbines, but apparently to no avail. So, on balance, is the planning system ‘too tough’ or ‘too light’ then?

It is both, and these are two sides of the same coin: when development rights are held by political bodies, the planning process follows political priorities. And apparently, wind farms rank higher on the political priority list than affordable housing. If we want a planning system which reflects the preferences of local residents more closely, we need to denationalise development rights.

A few years ago, IEA author Mark Pennington developed a proposal for how the transition to a non-state alternative could work. In a nutshell, it is a kind of common property rights system, in which the right to develop a particular plot of land would be devolved to private entities owned collectively by local residents. At least initially – these rights could then be freely bought and sold, and it is completely open what kind of market structure would result.

Here’s what this means in practice: suppose there are two similar villages, A and B. The residents of both villages are opposed to new developments in their area, so a survey or a public consultation would yield the same result in both places. However, suppose that while the residents in village A have extremely strong objections to development, the residents of village B do not mind it very much – a small compensation would suffice to make them change their minds.

A private developer could then purchase developments rights quite cheaply for the surroundings of village B, while it would be prohibitively expensive to do so for village A. Development would thus be channelled to the places where people are least opposed.

More realistically, the residents of both villages would probably be willing to tolerate some forms of development in some parts of their surroundings. Acquiring the right to build on an area of outstanding natural beauty would surely be prohibitively expensive, while acquiring the right to build on waste ground could be rather cheap. Likewise, the right to build houses in an architectural style that blends in well with the rest of the village would surely be cheaper than the right to build something which clashes with it. And that leads us back to our Welsh wind farms.

Under a system like the one just described, the right to obtain planning permission for wind farms could be quite cheap in places where people do not mind hugely – possibly around Brighton, where nearly a third of the electorate votes Green. In a place like Wales, it could be considerably pricier.

Or maybe not. Protesting for a particular cause, or advocating it in a public consultation, does not cost anything. We have to give it a try – people’s preferences only become apparent when they are faced with real choices and their actual costs.

The problem is that this system wouldn't work for the Mid Wales development. The majority of the opposition is coming from the people objecting to the pylons required to export the electricity from the wind farms. You would end up with a system whereby you've bought the rights to built a windfarm but can't afford to buy the rights to build the grid connection necessary to use it. People who actually wanted development would be stymied by other people who didn't.The market rate for a given patch of land would be influenced not by the wishes of that particular village, but by the wishes of all the villages around it.
The same would apply to housing - additional houses around one village would have an impact upon the transport routes required to access that village and any other villages in the area. This would not be covered by the purchase of development rights, and if you think people won't object to additional traffic on transport routes near them, you've never been involved in planning.

Submitted by Richard Wellings on Wed, 25/05/2011 - 13:48.

@Adam Bell - the solution to the transport issue you mention is surely the privatisation of transport infrastructure. Private road owners would have incentives to encourage land development in order to increase their revenues and profits, adding new capacity where necessary. Indeed, they would probably play a leading role themselves in land development, as did private railway companies before the era of big government.

@Richard: There's a presumption there that people won't object to both a increase in usage of existing transport capacity and an increase in transport capacity. Building more roads involves 'desecrating our precious countryside' or whatever nimbys are saying nowadays. Simultaneously, having more cars going through the village might 'STOP OUR CHILDREN FROM PLAYING IN THE STREETS!'.
The majority of the people who retire to the countryside want the countryside to be preserved in aspic and never touched again. You're presuming all people take a rational approach to planning issues. They do not.

@Adam
>>this system wouldn't work for the Mid Wales development...
>>The market rate for a given patch of land would be influenced not
>>by the wishes of that particular village, but by the wishes of all the villages around it.
Why is that a problem? It is like a situation in which you want to organise a party in your flat, and the landlord imposes a condition in the rental contract that the tenants who live above and below you have to give their consent. Now suppose the former give their consent straight away, but the latter refuse categorically, even as you offer them a compensation. Would it be correct to say that "the system doesnt work"? -No: It just doesn't produce the outcome you want. So what you're really saying is: The system is bad because it makes it harder to build windfarms.

The problem with this proposal is that it appears to be totally unworkable.

You argue that it would lead to wind farms being built in "places where people do not mind hugely", but what if those areas are also the ones with no wind?

As for the example of two villages A and B, it is flawed on at least four counts.

If the villages are so similar then their residents are likely to be of the same mind as well. So the difference in financial terms in making them change their minds is likely to be minimal.

Secondly, for any financial inducement to work it requires the residents to either experience a significant financial gain if the planning is approved, or a significant loss if it isn't. You fail to demonstrate the feasibility of either. For such a system to work it requires elements of game theory to be incorporated: specifically those found in the Prisoner's Dilemma. This proposal has no such properties that I can see. Where is the catastrophic outcome for both villages if they both veto the planning application? Where is the proof that the benefits will exceed the costs (real or perceived) for the village that agrees to the development? As has already been noted, people are generally conservative and not particularly rational. They also rarely furnished with perfect information, so they are unlikely to believe or to know whether a new development is in their best longterm financial or social interests even when it is.

Then there is the problem of how the collective voting and financial rights are distributed among the residents and the wider public. Surely the distribution will differ for every piece of land. How bureaucratic will that be?

Finally there is the issue of scalability. The area of any development scales as the square of its circumference. Consequently, doubling the dimensions of a development doubles the number of nearest neighbours whose rights would need to be purchased, but it increases the revenues (from new house sales) available to purchase those rights by a factor of four. So, if this system were ever to work, there would usually be a critical size below which it didn't, and it would therefore tend to favour large schemes over small ones. New towns anyone?

"You argue that it would lead to wind farms being built in "places where people do not mind hugely", but what if those areas are also the ones with no wind?"
-Then there will be no windfarms. So what?
"If the villages are so similar then their residents are likely to be of the same mind"
-I've just assumed similarity for the sake of simplicity, of course.
"Secondly, for any financial inducement to work it requires the residents to either experience a significant financial gain if the planning is approved, or a significant loss if it isn't. You fail to demonstrate the feasibility of either."
-Just look at the difference in value between a plot of land with planning permission and one without. If only a tiny fraction of that could be captured by the residents, refusing permission would have a very high and very visible opportunity cost. Unlike the present system, where refusing everything is free. We can say with near certainty that more developement would be approved under a system which shows people the opportunity cost of refusing than under the present system which doesn't. However, that does probably not apply to windfarms.
"For such a system to work it requires elements of game theory to be incorporated: specifically those found in the Prisoner's Dilemma."
-It's got nothing to do with Prisoner's Dilemmas. Every locality decides independently how much developement they are willing accept, and how much compensation payments they are willing to forego. What other localities do is of no concern to them.
"Where is the catastrophic outcome for both villages if they both veto the planning application?"
-There is none (why should there be one)? But there is an opportunity cost: The foregone payment from the developer.
"Where is the proof that the benefits will exceed the costs (real or perceived) for the village that agrees to the development?"
-This is like asking 'Where is the proof that the benefits of a pint of ale exceed the costs?'. It does for some people and in some situations, while in others it doesn't.
"people are generally conservative and not particularly rational. They also rarely furnished with perfect information, so they are unlikely to believe or to know whether a new development is in their best longterm financial or social interests even when it is"
-I dont know about that, but assuming you're right for the sake of the argument: that would be the case under ANY system of allocating development rights. At the moment we have a political system. Why should that be aloof of the general defects of human nature?
"How bureaucratic will that be?"
-As bureaucratic as people want it to be. Models with simple and clear rules for decision making will be in competition with other models with more elaborate rules.
"As I said, problems, problems, problems!"
-Absolutely. As with any other system of allocating development rights.

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